Cooling Labor Market Can Help Inflation Come Down: Kiplinger Economic Forecasts
Inflation could ease further as unemployment starts edging up and more workers are reluctant to quit.
Inflation is affected by a multitude of factors in the economy, and it's not always easy to keep tabs on all of them. To help you understand what is going on and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...
Though the labor market still looks healthy, it’s showing signs of cooling. Jobless workers can’t expect to find a position as soon as they start looking, as was typical during the peak of the COVID-era labor crunch. They have to hunt now, though there is still plenty to hunt for. Also, workers with jobs aren’t quitting freely, the way they were back when it was so easy to land another job. The quit rate is back to its prepandemic level, signaling greater caution about job availability. What’s more, the unemployment rate and jobless claims are nudging up, though they remain low.
This nascent trend is good news for the Federal Reserve, as it looks for clues as to how fast inflation will come down. The Fed can’t reach its overall inflation goal until wages stop rising so quickly, so a slowdown in hiring and raises will be welcome. Lately, wages have been rising at a 4.3% annual rate. By year-end, we look for 3.5%.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Of course, a downturn in hiring may presage a recession. We expect one to arrive sometime late this year or early in 2024, though it should be mild. However, there’s still hope that if the Fed’s interest rate hikes end soon, and if the labor market slows but doesn’t stumble, we might just skate by with a period of weak growth.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.
Related Content
- What is a Recession? 10 Facts You Need to Know
- Kiplinger’s Interest Rates Outlook: Fed Pauses, But Is Not Done Raising Rates
- Kiplinger Jobs Outlook: Strong Hiring Keeping Slowdown at Bay
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics. He has two master's degrees and is ABD in economics from the University of North Carolina at Chapel Hill.
-
How to Help Your Kids Without Ruining Your Retirement
Here are some general considerations to ensure the gift of assets to your kids will not negatively affect your financial future.
By Mario Hernandez Published
-
AI to Power the Next Generation of Robots
The Kiplinger Letter There's increasing buzz that the tech behind ChatGPT will make future industrial and humanoid robots far more capable.
By John Miley Published
-
A Spotlight on the Pacific States: The Kiplinger Letter
The Kiplinger Letter Most Pacific states are seeing good job growth in multiple sectors including tourism, hospitality, and construction.
By David Payne Published
-
The Robots Are Coming... But Not For a While
The Kiplinger Letter There’s excitement in the tech sector over the potential of humanoid robots, but widespread adoption is likely to be years away.
By John Miley Published
-
Farmers Face Another Tough Year As Costs Continue to Climb: The Kiplinger Letter
The Kiplinger Letter Farm income is expected to decline for a second year, while costs continue to up-end farm profitability.
By Matthew Housiaux Published
-
A Spotlight on the Mountain States: The Kiplinger Letter
The Kiplinger Letter Most Mountain states are seeing good job growth in multiple sectors from healthcare, energy, and semiconductor production to farming and government.
By David Payne Last updated
-
A Spotlight on the Plains States: The Kiplinger Letter
The Kiplinger Letter The labor market is tight in the Plains states and outside of healthcare and construction most sectors are flat or down.
By David Payne Published
-
Kiplinger's Commodities Forecast
The Kiplinger Letter Following a rocky few years for markets, we expect commodities to be less volatile in 2024, as a post-pandemic normal finally emerges.
By Matthew Housiaux Published
-
Growth Stalls in China As Property Market Continues to Struggle: The Kiplinger Letter
The Kiplinger Letter The property market remains a major drag on Chinese growth, with sales now 50% below their peak.
By Rodrigo Sermeño Published
-
A Spotlight on the South Central States: The Kiplinger Letter
The Kiplinger Letter Outside of the tech sector slump, job growth in the South Central states remains buoyant, with healthcare, construction and business investment going strong.
By David Payne Published